Banks Behaving Badly: £17 billion invested in cluster munition producers while use of banned weapon continues in Ukraine and Syria

November 27, 2014 Comments are off

151 financial institutions worldwide invested £17 billion in companies producing cluster munitions from 2011 to 2014, according to a report launched today by Cluster Munition Coalition member PAX (the Netherlands). The report, “Worldwide Investments in Cluster Munitions: a shared responsibility,” details the scale of investment in companies producing this banned weapon by banks, pension funds and other financial institutions around the world. US$1.4bn is invested in cluster munition producers by UK financial institutions in the report’s ‘Hall of Shame’.

While the majority of states recognise cluster munitions as unacceptable due to the humanitarian risk to civilian populations, production of the weapon continues in a limited number of countries yet to join the 2008 Convention on Cluster Munitions. The new report from PAX shows which financial institutions have invested in cluster munition producers between June 2011 and September 2014. The report’s “Hall of Shame” shows the majority of investments come from financial institutions in states that have not yet joined the Convention on Cluster Munitions. Yet financial institutions from countries that have joined the treaty are also still involved.

Seven UK financial institutions feature in the report’s Hall of Shame. Six UK financial institutions are categorised as ‘runners up’ meaning they have taken steps but their policies still contain loopholes. Just one UK bank features in the report’s Hall of Fame. Aberdeen Asset Management is the largest UK investor, with a US$771.69 shareholding in Singapore Technologies Engineering.

“It’s time the UK and other countries that have joined the global ban on cluster munitions regulate the practice of these bad banks and legislate quickly to ensure they are not supporting the overseas production of weapons they have already outlawed,” said Laura Boillot, of Article 36.

In contrast, nine States Parties to the Convention (Belgium, Ireland, Italy, Liechtenstein, Luxembourg, the Netherlands, New Zealand, Samoa and Switzerland) have led by example, enacting national laws that prohibit public or private financial institutions from investing in cluster munitions.

“Cluster munitions are banned by international law; a majority of the countries in the world has recognised that this weapon is unacceptable. And yet cluster munition producers are still able to fund their activities. Financial institutions should introduce robust policies to ensure they are not supporting companies involved in the production of this banned weapon,” said Suzanne Oosterwijk, co-author of the PAX report.

While the number of financial institutions investing in companies producing cluster munitions remains high, the report shows an increase in financial institutions with policies to prohibit this practice. Seventy-six financial institutions are listed in the 2014 report as having cluster munition policies in place.

Recent use of cluster munitions in Syria and eastern Ukraine further demonstrates the urgent need to eradicate this weapon. Last month Cluster Munition Coalition member Human Rights Watch documented widespread use of cluster munitions in eastern Ukraine, in fighting between government forces and pro-Russian rebels. In Syria civilians account for 97% of recorded deaths where cluster munitions have been used over the past two and a half years.

“We must put lives before profit. We’re talking about a weapon that is currently killing civilians in Syria and eastern Ukraine and continues to claim lives in Laos fifty years after it was used. Yet financial institutions have invested US$27 billion—more than twice the GDP of Laos—in producers of this banned weapon,” said Amy Little, Campaign Manager at the Cluster Munition Coalition (CMC).